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The Bread Tribute 

Bread Profiteers and Bankrupt Farmers 


A REPORT 

By Basil M. Manly, Director 
The People's Legislative Service 


“The present high price of bread is not only levying 
heavy tribute upon every man, woman and child 
who eats the baker’s product; but this indefensibly 
high price is in large measure responsible for 
the deplorable condition of American farmers.” 


Series 3, No. 1 


THE PEOPLE’S PAMPHLETS 

Price 10 Cents 


Published by 

PEOPLE’S LEGISLATIVE SERVICE 
WASHINGTON , D. C. 

. (t _ 


Allograph 





























The People’s Legislative Service 


EXECUTIVE COMMITTEE 

Senator Robert M. La Follette, Wisconsin, Chairman 
Representative George Huddleston, Alabama, Vice-Chairman 
William H. Johnston, Washington, D. C., Secretary-Treasurer 


Senator Smith W. Brookhart 
Iowa 

Senator Burton K. Wheeler 
Montana 


Miss Elizabeth J. Hauser 
Girard, Ohio 
Herbert F. Baker 
Weadock, Mich. 


Representative Roy 0. Woodruff 
Michigan 

Mrs. Mabel C. Costigan 
Washington, D. C. 


W. G. Lee 

Cleveland, Ohio 
Warren S. Stone 

Cleveland, Ohio 


W. T. Rawleigh, Freeport, Ill. 


BASIL M. MANLY, Director 


The People’s Legislative Service was established by a conference held in 
Washington on December 17, 1920, to meet a definite need acutely felt by 
all familiar with national legislation. 

This need arises out of the fact that while special interests of all kinds 
are represented in Washington and bring their influence to bear upon legis¬ 
lation, the interest of the general public is not represented. 

The People’s Legislative Service is not a Lobby. It is a “Fact Service.” 

The Service furnishes facts to all members of the House and Senate who 
will use them in the public interest. It furnishes facts to the representatives 
of affiliated organizations so that they may present their cases effectively. 
It furnishes facts to the public regarding pending legislation. 

The Service endeavors to perform its work without regard to partisan 
considerations, and with an eye single to the good of the whole people. • 

It is supported by the contributions of organizations and individuals. 

Life Membership —$1,000. 

Sustaining Membership —$100 a year. 

Regular Membership —$5 a year (Half rate to members 
of teaching and clerical professions). 

Associate Membership —$1 a year. 

For further information , address 
HELEN K. MYERS, Executive Secretary 

Fendall Building Washington, D. C. 

Copyright, 1924, by 
The People’s Legislative Service 




© Cl A780206 


M&R -b 1924 








HIhosi 

1 The Bread Tribute 

By Basil M. Manly 

Director, People’s Legislative Service 
Former Joint Chairman, National War Labor Board 

H OUSEWIVES and farmer^, city folk and country folk, factory 
workers and farm workers, all have a common interest and a 
common basis for indignation and concern in the unconscion¬ 
able discrepancy that exist between the price of wheat and the price 
of bread. 

The facts set forth in this report indicate strongly that the present 
high price of bread is not only levying heavy tribute upon every man, 
woman and child that eats the baker’s product; but that this inde¬ 
fensibly high price of bread in the United States is in large measure 
responsible for the deplorable condition of American wheat farmers. 

The facts also demonstrate that this situation is not and will 
not be corrected by the operation of economic forces. The law of 
supply and demand does not operate in this field. The necessity for 
governmental action is obvious and imperative. 

The year 1923 has been one of the most disastrous for the wheat 
farmer, but it has been one of the most prosperous for everyone who 
handled the wheat after it left the farm. Many thousands of wheat 
farmers have been driven into bankruptcy and forced to abandon 
their homes. Yet bread users in America—and this means prac¬ 
tically every man, woman and child—are paying wartime prices for 
bread. 

During recent months the price of wheat has fallen almost as 
low as it was in the depressed pre-war year 1913, and yet the people 
in American cities are paying 50, 75, and even 90 per cent more for 
bread than they did before the war. Viewed from another angle, 
the price of wheat is now less than half as great as it was in 1917, 
and yet the price of bread remains almost as high as during that year 
of wartime profiteering, when millers, jobbers, bakers and retailers 
lined their pockets with gold. 

.If the price of bread was reduced in proportion to the fall in 
wheat since 1917, bread would now sell for 4.4 cents a pound. .On 
the other hand, if wheat prices had been maintained as bread prices 
have been since 1917, wheat would now be selling at Minneapolis 
for $2.00 a bushel. 

If any government should levy taxes as oppressive as private 
industry now imposes on the bread of the American people, revo¬ 
lution would be inevitable. 

SOME STARTLING STATISTICS 

Only a few figures are necessary to present a clear picture of 
the general situation. The pre-war year 1913 may be taken as a 

3 


standard. In that year wheat on the farm sold for an average price 
of 79.4 cents per bushel, while flour at retail brought 3.3 cents per 
pound, and bread, 5.6 cents per pound, retail. This year, in No¬ 
vember, the last month for which complete figures are available, 
wheat sold for 92.3 cents per bushel on the farm, while flour at retail 
brought 4.6 cents, and bread 8.7 cents per pound, retail. That is, 
in ten years, since 1913, wheat has advanced in price 16 per cent, 
flour 39 per cent, and bread 55 per cent. 

The price of flour has, therefore, increased more than twice as 
much as wheat, and the price of bread more than three times as 
much. 

In this connection, it should be stated that even before the war 
the price of bread in the United States was outrageously high as 
compared with other countries. It is an old adage of the baking 
trade that there is a good profit for the baker when the price of bread 
per pound is equal to the price of flour per pound. This arises out 
of the fact that because of the absorbed moisture a pound of flour 
produces a pound and a third of bread. The third of a pound excess 
is sufficient to enable the baker to pay his expenses and make a reas¬ 
onable profit. 

This is stated by Vernon Kellogg and Alonzo E. Taylor of the 
United States Food Administration in their work on “The Food 
Problem,” as follows: 

“Despite the fact that the price of grain was distinctly higher than the 
pre-war level, the cost of bread (in Germany) was maintained at practically 
the pre-war figure. The formula by which this was accomplished was one 
that had been worked out in Belgium by the American Relief Commission 
during the first year of the war, and runs to the effect that the price of bread 
per pound must not exceed the price of flour per pound." 

As will be shown later, this is the rule today in England, where 
bread baked with American flour sells for the same price per pound 
as flour, and for less than half as much as the price in American cities 
located in the heart of the wheat belt. 

As will be seen from the figures quoted above, the price of bread 
per pound in 1913 was 2.3 cents greater than even the retail price of 
flour. But this unjustifiably high margin has been increased until 
now in American cities bread is selling for 4.1 cents per pound more 
than the retail price of flour. 

In other words, the present price of bread in the United States 
is twice as great as it should be. The loaf that sells today for ten 
cents can and should be sold for five cents. A pound of bread is 
actually being sold in England today for 4 cents, after paying ocean 
freights and harbor charges on wheat from America, the Argentine 
and Australia. 

WAR BREAD AND PRE-WAR WHEAT 

President Coolidge in his recent address to Congress strongly 
denounced the existence of war taxes in times of peace. Against 
this view, it may well be argued that a government is justified in 
continuing to levy war taxes until war debts are paid. But who can 
find justification for a government that placidly permits private in- 

4 


dustry to levy a toll as high or higher than it extorted under the 
alleged necessities of war upon the essential food of the poorest and 
weakest of the population? 

In 1917 the United States was at war, and the world demand had 
forced the still uncontrolled price of wheat to heights never before 
known in America. Bread prices rose correspondingly. Since that 
time, the American farmer has been deflated in the most colossal 
crash of property values ever known. But the bread profited s have 
not been. On the contrary, the price of bread is today practically 
the same as it was in 1917. 

Let us look at the figures. In September, 1917, the price of 
wheat on the farm was $2.10 per bushel, and bread was selling for 
9.2 cents per loaf. In September, 1923, wheat had fallen to 93 cents 
a bushel, but the bread price remained practically unchanged at 8.7 
cents per pound. The price of bread had declined 5.4 pei cent, but 
the price of wheat had dropped 55.6 per cent. The deflation of wheat 
is therefore ten times as great as the deflation of bread. 

On the basis of the present price of wheat as compared with 1917, 
bread should be selling at 5 cents a loaf, while on the basis of present 
prices of bread as compared with 1917, wheat should sell at $2.00 a 
bushel. 


BRITISH BREAD AT HALF PRICE 

Before proceeding further in our analysis of the bread problem, 
it is well to forestall the idea that there may be some basis in the play 
of world-wide economic forces for this amazing difference in the price 
levels of bread and wheat. This may be accomplished most simply 
by a brief examination of the situation in England. 

The Labour Gazette of the British Ministry of Labour shows 
that on November 1, 1923 the average price of bread in England was 
8j^d. for four pounds. This was a decrease of J^d. during the past 
six months, corresponding to the decline in wheat prices. At par 
8j^d. is equal to 17 cents in American money for four pounds, or 
4J4 cents per pound. But at current rates of exchange—and the 
English must pay for American flour in dollars—Id. is equal to only 
1.83 cents. This brings the English retail price for bread in Ameri¬ 
can currency to 3.9 cents per pound. 

The Englishman, therefore, pays less than four cents for the 
same amount of bread for which the American pays nearly 9 cents. 

The first explanation of this wide discrepancy that comes to mind 
is naturally the great difference in American and English wages. 
When we go beneath the surface, however, we find this largely offset 
by the widespread use of labor-saving devices in the United States. 
As a result the American labor cost is only half a cent a pound more 
than the English. 

Some allowance should also be made for the fact that the English¬ 
man as a rule buys his bread in four-pound loaves, and thus saves 
the cost of handling. But even if we allow half a cent a pound to 
cover this item and half a cent for higher labor cost, the American 
still pays almost twice as much for his bread as the Englishman. 

I have already pointed out that in England bread sells on the 
honest basis of the same price per pound as the price of flour. As 


5 


a matter of fact, it is slightly less. Here are the figures. On Novem¬ 
ber 1, 1923, according to the British Labour Gazette, the retail price 
of flour in England was Is. 3d. for 7 pounds. At current rates of 
exchange, this is 3.93 cents per pound for flour, as compared with 
3.90 cents per pound for bread. 

This English bread is not government subsidized, nor is the 
price artificially restricted by law. The English loaf is merely free 
from the burden of excessive profits and wasteful costs that are im¬ 
posed upon American bread. 


PIRATICAL PROFITEERING 

We have now gone far enough in our analysis to raise and at¬ 
tempt to answer the question—Who gets the money? 

In a broad way, the answer is simple—the miller, the jobber, 
the baker, the retailer and the railroad. Apparently everyone that 
handles wheat, flour or bread—except the farmer—finds gold sticking 
to his fingers. 

On page 43 of his report to President Coolidge on "The Wheat 
Situation,” the Secretary of Agriculture displays, without explana¬ 
tion or comment, a diagram purporting to show the relative amounts 
and proportions of the selling price of a pound of bread received by 
each of the principal factors in its production and distribution—the 
farmer, the miller, the railroad, the baker and the retailer. 

The following figures extracted from that diagram cannot, for 
the reasons set forth below, be accepted to represent with entire 
accuracy the existing situation, but they are the best figures of the 
kind available and sufficient to indicate the relative shares received 
by each of the factors in 1913 and 1923: 

DISTRIBUTION OF THE RETAIL PRICE OF A 1-POUND LOAF OF 
BREAD IN WASHINGTON, D. C. 

{Compiled from report of Secretary of Agriculture on “ The Wheat Situation ”— p. 43.) 

1913 1923 

cents cents 


Wheat Growers’ Portion (amount of wheat required to mill 

standard patent flour for 16 ounces of bread).. 1.17 1.47 

Elevator Margin. .05 .12 

Freight Charges (Wheat to Minneapolis). .11 .15 

Milling Margin. .42 *.48 

Freight Charges (flour—Minneapolis to Washington)__ .17 .29 

Materials Other Than Flour. 38 *1.25 

Bakers’ Margin (manufacturing, delivery and selling, adminis¬ 
tration, plant maintenance, profit or loss). 2.03 3.24 

Retailers’ Margin (labor, delivery, store maintenance, credit, 

profit or loss)... 1.12 2.00 


_ 5.45 9.00 

*These items are not in accordance with information from other sources. 
Present earnings of flour mills indicate a considerable increase in the milling 
margin over 1913. With reference to the “cost of other materials,” it is incon¬ 
ceivable that the cost of these materials has increased more than 200 per cent 
unless a different bread formula is used. Of the principal “other materials” 
used in bread, condensed milk has increased only 32 per cent, sugar 110 per 
cent, and lard 21 per cent. 


6 











It may be observed, in the first place, regarding these figures 
that unless the formulas used at the two periods were widely different, 
it is impossible that there should have been an increase of 228 per 
cent in the item “cost of other materials.” The use of different for¬ 
mulas for the^two periods appears to be unjustifiable. The figures 
on the millers’ margin are also open to question, as will be pointed 
out when we come to consider the profits of the milling corporations. 

Overlooking these minor points, however, we may concentrate 
attention on the main point—the relatively insignificant cost of wheat 
in relation to the cost of bread. The wheat growers’ portion of a 
9-cent loaf in 1923 is only 1.47 cents as compared with 1.17 cents 
out of a 5j^-cent loaf in 1913. The farmers’ share of the bread 
price is 16 per cent now as compared with 21 per cent before the war. 

With this somewhat unsatisfactory analysis of the component 
costs of a loaf of bread as a starting point, we may now proceed to 
a consideration of the profits realized in the production and distri¬ 
bution of bread. 

THE MILLERS’ PROFITS 

We come first to the millers. Unfortunately, most of the flour 
milling corporations do not publish their profits, perhaps because 
they have something to conceal. As a result, the reports available 
for 1922 and 1923 are fragmentary and do not reveal the true situ¬ 
ation, except in the light of other data. 

In 1919, however, in response to a Senate resolution, the Secre¬ 
tary of the Treasury was required to report the profits of American 
corporations, which earned 15 per cent or more on their capital stock 
as revealed by their corporation and excess profits tax returns for 
the years 1916 and 1917. These figures were published in Senate 
Document 259—one of the most valuable reports ever printed. This 
official report shows that the milling corporations in both these years 
made profits that stagger the imagination. Unfortunately, under 
the secrecy clause of the Revenue Law, this report does not give 
the names of the companies; but a few figures are sufficient to show 
how these corporations fared while the soldiers were in the trenches, 
and to indicate their probable profits today. 

Taking only the largest milling companies—those with capital 
stock of $300,000 and over—we find that they had net incomes in 
1917 averaging 49.1 per cent of their capital stock and ranging as 
high as 182 per cent. This is after the payment of manufacturing 
expenses, interest on borrowed capital and liberal allowances for 
depreciation. 

These figures may also be compared with those given in the re¬ 
port of the Federal Trade Commission on Commercial Wheat Flour 
Milling, which show that the average profit for 37 companies in 
1916-17 was 38.4 per cent on an investment of $55,382,957, including 
money borrowed at low rates of interest. 

These figures mean that the profits on flour during this war 
period were so great that the earnings of 2 or 3 years would have been 
sufficient to pay up all outstanding capital stock or retire the invest¬ 
ment. In other words, the people of the United States paid for the 
entire business in 2 or 3 years of excess profits. 


7 


These are, however, average figures. When we look below the 
surface we discover profits that stagger the imagination. For ex¬ 
ample, the company bearing the code number F-8-29, with a capital 
stock of $100,000, had a net income of $256,886, or 257 per cent on 
its capital stock in 1917 and 114 per cent in 1916. Now it is quite 
true that this corporation claimed an investment of $455,056, but 
we may be quite sure that this so-called investment represented 
property purchased either with money borrowed at 6 or 7 per cent 
or, even more probably, with the excess profits of previous years. 
As a matter of fact, in the case of the majority of these industrial 
companies, it is notorious that their common stock was given as a 
bonus to bondholders or preferred stockholders, and did not represent 
a cent of actual investment. 

Here are other examples from Senate Document 259 (pages 89-93, 
and 365): 

FLOUR MILLING COMPANIES 

Per Cent of Net Income on Capital Stock 



1917 

1916 

Code No. F-8-40_ 

_ 387.6 

18.9 

Code No. F-8-61. ... 

659.6 

314.5 

Code No. F-8-67... 

. 387.1 

159.2 

Code No. F-8-228. .. 

. 306.7 

89.5 

Code No. F-8-236. .. 

. 787.4 

694.0 

Code No. F-8-253.... 

. 546.3 

108.6 

Code No. F-8-268.... 

_ 440.1 

291.5 

Code No. F-8-10 Sup_ 

_ 991.7 

374.3 

Code No. F-8-12 Sup_ 

_ 2,628.7 

594.3 

Code No. F-8-13 Sup.. 

986.4 

298.9 


These ten companies, whose identities are concealed by the 
secrecy clause of the income tax law, had profits ranging from a 
minimum of 306 per cent to a maximum of 2,628 per cent. 

We may be quite sure that these profits are not exaggerated 
because they are the amounts reported by the corporations them¬ 
selves as a basis for the payment of income and excess profits taxes. 
Judging from recent official exposures of wartime tax-dodging, we 
may be sure that in some cases at least even these unbelievable profits 
are understatements. 

The report of the Federal Trade Commission on Flour Milling 
cited above shows how these profits were made. It points out (page 87) 
that the average rate of profit per barrel of flour, after the payment 
of interest, increased from 14 cents in 1913-14 to 55 cents in 1916-17 
and 65 cents in 1917-18. 

The profit per barrel of flour in the two war years was more than 
300 per cent greater than the pre-war profit, and because of the 
world-wide demand there were more more barrels of flour on which 
to levy these excessive profits. 

PRESENT PROFITS 

These figures on the war profits of the millers, which were sup¬ 
posed to be regulated by Mr. Hoover and the Food Administration, 
are not cited for the purpose of exposing wartime profiteering, but 

8 












for the light they may throw on the probable present profits 
on flour. 

It will be remembered that in 1917, when these exorbitant profits 
were earned, wheat was selling for twice its present price and flour 
was almost correspondingly high. Since that time the price of wheat 
has fallen more than the price of flour, leaving a larger margin for 
the miller. To be exact, the price of No. 1 Northern Wheat at Min¬ 
neapolis had fallen in November of this year 52 per cent below the 
average for 1917, while the wholesale price of flour (standard patents), 
also at Minneapolis, had fallen only 47 per cent. At the same time 
the price of bran, which the miller sells back to the farmer, had de¬ 
clined only 21 per cent. 

All other things being equal, these facts mean that the milling 
companies should be making larger profits this year than they did 
in 1917. There is, however, a factor that may upset these calcu¬ 
lations. The millers now claim that since 1917 the bakeries in many 
parts of the country have either combined into large corporations or 
have pooled their purchases. Through this consolidated purchasing 
power they have been able to extort from the millers very low prices 
for flour for commercial baking purposes, which has been estimated 
to represent between 40 and 50 per cent of the total sales. The 
ordinary consumer who buys flour retail does not, of course, share 
in these lower prices, but on the contrary is charged more to make 
up for the alleged extortion of the consolidated bakers. 

Following is an extract from a letter which formulates the millers’ 
charges against the bakers’ trust: 

December 15, 1923. 

“It seems that the large bakers throughout the United States, or at 
least, somewhere between fifty or a hundred of them, have got together 
and organized a sort of a trust, absorbing all their interests. Then they 
have made arrangements to buy flour through one buyer. The result is 
that they are putting a good many of the mills out of business. 

“They are buying flour at a low price, but the public does not get any 
benefit from the deal. In other words, wheat is around 80 cents out here 
and bread is selling at the same price as it did during the war when wheat 
was something like as high as $2.40. There is no doubt but what there is a 
violation of the Sherman Anti-Trust Law.” 

These charges should be investigated, not only in the interests 
of the millers who claim they are being put out of business by the 
pressure of the bakers’ combined purchasing power, but also for the 
benefit of the general public that is being made to pay high prices 
for flour to equalize the alleged extortions of the bakers. 

Current financial reports for flour milling companies are so 
meager as to afford little or no basis for checking these statements. 
There is no basic industry which so successfully conceals the facts 
about its operations. Regarding such well-known companies as 
Washburn-Crosby, we find only such statements as the following 
from the Wall Street Journal of October 2, 1923: 

“Net earnings for the past ten years after deducting all taxes and 
depreciation have averaged over $2,494,000 per annum or over five times 
the annual dividend requirements upon the preferred stock.” 

9 


As the outstanding preferred and common stock of the Wash- 
burn-Crosby Company are both seven million dollars, this means 
earnings at the rate of 28 per cent on the common stock, after allow¬ 
ing for a 7 per cent dividend on the preferred stock. We may also 
note, incidentally, that the Washburn-Crosby Company has accumu¬ 
lated surplus and undivided profits amounting to $4,441,776. 

The standard financial manuals report for the Pillsbury Flour 
Mills company: 

“Authorized capital stockj$5,000,000, increased from $3,000,000 by a 
150 per cent stock dividend, April 8, 1920. Does not furnish report of 
earnings." , tei 

Reorganization of the Pillsbury Flour Mills Company was com¬ 
pleted during the past three months, involving an increase of capital 
stock from $5,000,000 to $12,500,000. This would seem to indicate 
large current earnings. 

Other cases of large stock dividends disclosed by financial re¬ 
ports areStandaid Milling Company, 60% stock dividend, December, 
1922; Globe Grain & Milling Company, stock dividends, December 
15, 1908, 25%; May 27, 1914, 75%; November, 1920, 60%. Through 
these cumulative dividends the stock of this company has been in¬ 
creased to 3J4 times its original amount without a dollar of invest¬ 
ment by the stockholders. 

THE BAKERS’ PROFIT 

Current financial reports of the profits of baking companies are 
somewhat more satisfactory because some of the big baking corpor¬ 
ations have recently listed their securities on the stock exchanges and 
are therefore compelled to make some report of their earnings. 

Before plunging into these statistics, however, we may consider 
the following illuminating statement regarding bread profits in the 
advertisement of the Purity Baking Company bonds, published in 
financial journals of February, 1923: 

“The baking industry, furnishing a prime necessity of life, has demon¬ 
strated that almost alone among our national industries, it thrives in de¬ 
pressed as well as in prosperous times. The business is done on practically 
a cash basis, the turnover is very rapid and the inventories are small and 
very liquid.” 

This frank statement seems quite conservative when we examine 
the records of some of the companies. 

As wartime profiteers, the bakers, according to their tax reports, 
were not quite the equals of the millers. The larger corporations, 
having outstanding stock of $300,000 or more, reported average 
profits of 27 per cent on their capital stock, according to the figures 
given by the Secretary of the Treasury in Senate Document No. 259. 

Here are, however, some of the more spectacular profits reported 
in the same official document (page 80-83): 


10 


BAKING COMPANIES 

Per Cent of Net Income on Capital Stock 
1917 1916 

Code No. F-l-3.. *..... 267.9 125.8 

Code No. F-l-12. 230.6 363.6 

Code No. F-l-70. . . 218.7 153.3 

Code No. F-l-107. 337.4 218.6 

Code No. F-l-148_ 240.5 19.5 

Code No. F-l-170. . 346.3 156.1 

Code No. F-l-189. 424.7 386.3 

Code No. F-l-205.... 272.3 168.8 

While these profits are not quite as exorbitant as those shownfirt 
the same year by the millers, it may be noted that the most profitable 
period for the bakers was not during this war period when the price 
of wheat and flour was advancing faster than the retail price of bread 
could well be inflated, but later when the price of wheat and flour 
crashed down and left the price of bread elevated above even the 
war levels. 

The average retail price of bread for the United States in 1917, 
according to the Bureau of Labor Statistics, was 9.2 cents a pound 
and by October, 1923 had fallen only to 8.7 cents, or 5 per cent. The 
price of flour in the meantime had fallen 47 per cent and the price 
of wheat 52 per cent. The material out of which bread is made 
had fallen, therefore, TEN TIMES as much as the price of bread. 

If the price of bread had fallen as much as the price of wheat, 
bread would now sell at 4.4 cents a pound. And the baker's were not 
exactly bankrupt in 1917! If the price of wheat had been maintained 
as the price of bread has been, wheat at Minneapolis would today 
sell for $2.00 a bushel. 

We shall consider a little later the bearing of certain other ele¬ 
ments in the cost of bread, including labor, but for the present it 
is sufficient to state that these are all minor elements of cost, too 
small to offset this great decline in the price of the principal raw ma¬ 
terial, while the price of bread remains practically unchanged. 

It would seem to follow, therefore, that the present profits of 
baking companies must be even greater than the extraordinary profits 
already shown for 1917. 


THE GENERAL BAKING COMPANY 

As indicating the accuracy of this conclusion, a study of the Gen¬ 
eral Baking Company is illuminating. Fortunately, this corporation 
publishes fairly complete financial statements. The Ward Baking 
Company and several of the other big bread companies do not. 

The most recent reports available for the General Baking Com¬ 
pany show that this corporation in 1922 earned at the rate of 117 
per cent on each share of its original common stock, and in that year 
declared two stock dividends, one of 100 per cent in January and 
one of 200 per cent in December. 

This is not my calculation but that of the highly conservative 
Wall Street Journal of February 24, 1923, as set forth in the following 
quotation: 


11 










“Report of General Baking Company for year ended December 31, 
1922, shows net profit of $4,701,422, equivalent after preferred dividends 
to $9.60 a share on 415,734 shares, no par common, or $117.18 a share 
earned on 34,000 shares $100 par common outstanding December 31, 1921; 
and compares with $45.54 earned in that year and $14.29 a share earned in 
1920.” 

This is truly turning bread into gold! 

The earnings for 1923 have not yet been published, but there 
is^every reason to believe that they are in excess even of the extra¬ 
ordinary earnings of 117 per cent in 1922. This is shown by the fol¬ 
lowing quotation from Financial America of May 24, 1923: 

GENERAL BAKING COMPANY 
Capacity Operations—Larger Earnings 
“Company is operating at capacity rate and earnings so far this year 
are in excess of those in 1922, it is stated. It is anticipated that the present 
high earnings will continue throughout the remainder of the year.” 

117 PER CENT PROFIT ON WATER! 

These extraordinary profits of 117 per cent and over on the com¬ 
mon stock of the General Baking Company would be indefensible 
even if they represented earnings on the investment of actual dollars 
by stockholders under conditions of great risk. But they do not. 

The common stock of the General Baking Company does not 
represent actual investment by the stockholders. It is water. 

When the General Baking Company was organized by the con¬ 
solidation of twenty companies in 1911, the Audit Company of New 
York reported the present value of all its real estate, buildings, ma¬ 
chinery and equipment to be $3,631,796. This was less than the 
amount of its $3,428,000 of first mortgage bonds, plus its $400,000 of 
gold notes then outstanding. The other large item in its assets—- 
"Investments in other corporations”—was less than one-third of its 
preferred stock. There was, therefore, nothing behind its $3,400,000 
of common stock and more than half its preferred stock except the 
$6,899,599 of "Good will,” which first appears separately in the bal¬ 
ance sheet of December 31, 1912. 

THREE HUNDRED DOLLARS FOR ONE! 

This is also indicated by the spectacular rise of the common 
stock. 

GENERAL BAKING COMPANY COMMON STOCK* 

(Price per share of original issue) 


1912. 

. $20 

1918. 

. $8 

1913.. 

.. 23 

1919. 

. 27 

1914. 

. No quotation 

1920. 

. 38 

1915. 

. 7 

1921. 

. 125 

1916. 

.. 2 

1922. 

. 332 

1917. 

. 3 

1923. 

. 618 


*Quotations are based on value of original issue of common stock. A stock 
dividend of 100 per cent in January, 1922, gave each stockholder two shares for 
one and a second stock dividend of 200 per cent in December, 1922, multiplied 
these shares by three, giving each stockholder six shares for the one he originally 
held at the beginning of the year. The quotations on the inflated issues were 
168 in 1922 and 103 1-8 in 1923. Stock quotations for 1912-21 are from Moody’s 
Analyses of Industrials; for 1922-23 are from the Commercial and Financial 
Chronicle. 


12 















Two dollars invested in General Baking Common in 1916, just 
before we entered the world war, are now worth six hundred and 
eighteen dollars. In seven years, one dollar becomes three hundred 
and nine. This is an increase of 30,899 per cent! All because the 
American people are paying war prices for their bread. 

This huge advance in value was brought about and to some 
measure concealed by two huge stock dividends in a single year. 
The first stock dividend of 100 per cent was declared in January, 1922, 
presumably to conceal the earnings of 45 per cent on the common 
stock in 1921. The earnings of the General Baking Company in 
1922 were so enormous that a second stock dividend of 200 per cent 
was distributed as a Christmas present in December, 1922. The 
first of these stock dividends gave each shareholder 2 shares of stock 
for each one originally held, and the second multiplied this by 3. 
Thus each shareholder not only received in 1922 six shares of stock 
for each one they held at the beginning of the year, but under the 
beneficent ruling of the Supreme Court they were permitted to evade 
taxation on these huge melons. 

These profits Ayent chiefly to the “insiders.” As the Wall Street 
Journal of December 23, 1922 said: 

“General Baking did not come on the Stock Exchange until last June 
and the stock has always been closely held. Its rise, however, quietly 
accomplished has been amazing. Two years ago shares of the 34,000 out¬ 
standing common were quoted below 25. Today holders of these same 
shares have six shares paying $4 a share and selling around 60.” 


STOCK DIVIDENDS 


As has been stated above, other baking corporations do not 
make such complete reports, or, on the surface at least, display 
such remarkable earnings as General Baking. Here is, however, a 
statement from the Standard Bakeries Corporation of Chicago, one 
of the six largest bread companies. Through consolidation this cor¬ 
poration now owns bakeries in Akron (O.), Omaha, Denver, Pueblo 
(Colo.), Los Angeles, and Hammond (Ind.): 


1918. 

1919. 

1920. 

1921. 

1922. 


Net Earnings, Applicable to Interest, Taxes and Depreciation 

Net Earnings Available Times Interest 
for Int. } Taxes and Deprec. Earned Depreciation 

. $289,266 5.5 $75,623 

353,429 6.7 88,218 

. 416,585 7.9 114,574 

433,993 8.2 126,533 

”™ZZZ . 549,659 10.2 142,044 

(Commercial and Financial Chronicle , June 16, 1923.) 


These figures show that net earnings have, practically doubled 
in five years in spite of a large increase in depreciation reserves. 

We may also note the record of the Kroger Grocery and Baking 
Company of Ohio, which declared stock dividends of 50% in June, 
1920; 33 1-3% in December, 1920; and 100% in December, 1922. 
Through these cumulative stock dividends each stockholder now has 
four shares for each one that he held before June, 1920. 

13 







As I have already pointed out, no satisfactory reports of earnings 
are made public by the Ward Baking Company or by the United 
Bakeries Corporation, which as will be shown hereafter, is on the 
verge of forming a huge “Bread Trust” by absorbing Ward. 

Enough has already been shown to demonstrate the results of 
these modern alchemists who turn bread into gold. 

THE RETAILERS* PROFITS 

Here we cannot deal in percentages of profits on capital, because 
the retail grocers through whom the bulk of the bread is distributed 
deal in all kinds of merchandise. We may, however, secure a clear 
view of the unreasonable profits realized by the retailers on bread 
by considering certain simple facts. 

Before the war the retailers handled bread on standard margins 
of half a cent or a cent a loaf. Today they receive in most cities 
two cents a loaf, but reaching as high as four cents in certain cases. 
Thus the margin is two to four times as great as before the war, 
although neither the value nor cost of the service has increased appre¬ 
ciably. Generally there is little or no investment involved, as the 
retailer sells for cash and then settles with the bakery. 

At another point some evidence is presented to show the part 
the baking companies play in maintaining this large margin for the 
retailers. 

The extravagance of this retailer’s margin is even more strik¬ 
ingly shown by another consideration. On the basis of this year’s 
prices, the farmer received for the amount of wheat that goes into 
a pound of bread about 1.35 cents. This is just two-thirds of the 
retailer’s margin. 

Think of it—the storekeeper demands and receives 50 per cent 
more for letting a loaf of bread lie on his shelves a few hours and 
handing it to a customer than the farmer receives not only for his 
year’s labor of planting, cultivating, harvesting, threshing and mar¬ 
keting the wheat, but for his investment in the seed and land that 
grew the wheat and machinery with which it was cultivated. 

Could there be a more severe condemnation of the inefficiency, 
the injustice and insanity of existing methods of distribution in the 
United States? 

In England the cooperatives handle bread on a margin of 1-5 
of a cent a pound. The American retailers’ margin is just TEN 
times as great! 

OTHER FACTORS 

Before passing on to an examination of the evidence bearing on 
the methods by which bread prices are fixed, it is necessary to con¬ 
sider briefly certain factors that enter into present prices and to some 
extent are responsible for the present unreasonable levels. 

First of all we have the ever-present question of freight rates. 

The Secretary of Agriculture, in his recent report on “The Wheat 
Situation,” points out the great discrepancy that exists between 
railroad rates on grain in the United States and in Canada for similar 
hauls. His report states: 


14 


c Relatively high freight rates from producing regions of the United 
Mates to the seaboard are a serious handicap in competition with other 
countries m the markets of the world. The freight rates from points in 
Montana to Duluth are from 7 to 10 cents a bushel higher than the rates 
in Canada for the same distances to Port Arthur and Fort William at the 
head of the Lakes, from which the rates to Liverpool under normal condi¬ 
tions are substantially the same as from Duluth. 

******* 

. R is interest in this connection that while freight rates in the 
United States are still 45 per cent and more above the 1913 level, Dominion 
rates from the western Provinces to Port Arthur are practically on a pre¬ 
war basis." 

Although present freight rates are very burdensome, when com¬ 
pared to existing prices both of wheat and flour, we shall find when 
we come a little Jater to examine retail prices in the different cities, 
that transportation charges do not control bread prices. On the 
contrary, we find very high bread prices in Chicago and the very 
heart of the grain belt and very low prices in cities like New Orleans 
and Houston, Tex., at the end of long hauls from the wheat and flour 
centers. 


WAGES AND LABOR COSTS 

When the consumer begins to protest about the high price of 
bread and flour, he is almost always met with the same answer that 
has been given since the war to account for every kind of profiteer¬ 
ing—“Look at the wages we are paying.” In other words, the miller, 
the baker and the retailer all try to “pass the buck” to labor. 

This plea does not appear to hold water. When we go to the 
Census of Manufactures for 1919, when wages were at the peak, we 
find that the cost of all the labor in the flour mills is only 2.5 per cent 
of the wholesale value of their products. In other words, on a barrel 
of flour that sells for $6.00, the total labor cost is only 15 cents, or 
one-twentieth of a cent on the amount of flour that goes into a loaf 
of bread. 

Similarly in the statistics for baking, we find that the cost of 
labor is only about 14 per cent of the wholesale value of the product. 
As the average wholesale price of bread per pound is about 7 cents, 
this means a labor cost of about 1 cent a pound for the country as 
a whole. Assuming that there has been no increase in efficiency, the 
average increase in labor costs since. 1913 would be about half a cent 
a pound. 

This calculation is confirmed by figures appearing in the Decem¬ 
ber, 1923, issue of the Monthly Labor Review of the U. S. Bureau of 
Labor Statistics, which show the following average labor costs per 
pound of bread including all employes in the principal eastern cities: 
Baltimore, 0.55 cents; New York, 0.87 cents; Philadelphia, 0.91 cents; 
Washington, 1.17 cents. We have, therefore, a variation in labor 
cost from half a cent a pound in Baltimore to a little over a cent a 
pound in Washington. 

Now it is quite true that the wages of bakers have increased since 
1913 more than 100 per cent, because before the war they were miser¬ 
ably underpaid, a skilled oven-man receiving less than $3 for a long 
day’s labor. Present wages for journeyman bakers range from $6 

15 


to $7 a day. In this connection, it may be noted that wages in Hebrew 
bakeries are more than 50 per cent higher than in the large machine 
bakeries. With modern baking machinery, the amount of labor 
employed has been so greatly reduced that the cost of labor employed 
directly in the production of bread is almost a negligible quantity. 
By far the largest part of the labor cost is paid to the driver-salesmen, 
who are paid on a commission basis, and are therefore hardly to be 
classed as wage-earners. But even when these are included, the 
increase in labor cost since 1913 is still too small to be considered seri¬ 
ously in fixing the responsibility for inflated bread prices. 

BREAD AND BOLSHEVISM 

Thus far we have been considering the increased prices of bread 
and flour only as unjustifiable tribute levied upon the American people. 
Investigation shows, however, that the effects of these excessive price 
increases do not stop with merely stealing pennies and dollars from 
the pocket-books of housewives, but reach down to the very roots of 
the social and economic structure. 

This burden of exorbitant bread prices falls most heavily upon the 
very poor—upon those who because of their scanty incomes are forced 
to do without meat and fresh vegetables and subsist on bread, potatoes 
and other low cost foods. Five cents means little to the average 
American, but to the millions who are reduced to this standard of 
living the difference between 10 cents and 5 cents a loaf is the difference 
between subsistence and semi-starvation. When they know that bread 
is selling for war prices while wheat is back on the pre-war level, 
they see “red.” Here is the source of much of that unrest and dis¬ 
satisfaction that the professional “bolshevik hunters” point to with 
alarm as evidences of communism and bolshevism. 

Sir Charles Napier has well said: “People talk about agitators, 
but the only real agitator is injustice.” What greater injustice can 
there be than to charge exorbitant prices for bread and pile up the 
extravagant and unconscionable profits that have been shown above 
at every stage of the process? 

It is idle and vicious to say that the people do not know. They 
do. I was led to make this study largely because a section hand, the 
lowest paid job on the railroads, told me how he saw “red” whenever 
he paid 10 cents for a loaf of bread and realized that the farmers were 
getting 90 cents or less for their wheat. “My children,” he said, “are 
not getting enough bread or enough milk because I can’t afford to pay 
the price. The farmers are not getting my money. These high prices 
are making more bolsheviks than all the communist agitators put 
together. If this keeps on, I may go ‘red’ myself. What I want to 
know is this—What are we going to do about it?” 

It is not only in the cities but on the farms that this unrest is 
growing. The farmer knows that not only baker’s bread sold in the 
cities, but the flour and bran that he has to buy for his own use is 
“out of line” with the price of his wheat. When he sees his bran come 
back to him at almost the same price per pound that he got for his 
wheat, he is convinced that he is being robbed “going and coming.” 

16 


DOMESTIC CONSUMPTION DECLINES 

Because this burden of exorbitant bread prices falls heaviest 
upon the poor, its social and economic effects are far-reaching and 
disastrous. To the rich and well-to-do food costs are of little impor¬ 
tance—far less than taxes, for example. Bread forms an infinitesimal 
part of their cost of living, so they pay the price and grumble about 
taxes and other things. But with the poor—the widow and the work¬ 
ing man with the large family—it is different. Bread, for them, is 
truly the “Staff of Life.” When the price of bread rises, there is no 
recourse except to cease eating so much bread. That is undoubtedly 
what millions in the United States have done, not as a boycott but 
out of bare necessity. Let us look at some figures contained in the 
report of the Secretary of Agriculture on “The Wheat Situation, 
which show the results of this enforced abstinence. 

PER CAPITA CONSUMPTION OF WHEAT IN THE UNITED STATES— 
BUSHELS PER PERSON 


5.67 

5.38 

5.04 

4.34 

4.98 


1899-1908—average. 
1909-1913—average 
1914-192 0—average 

1921 _ 


1922 


These figures show a decrease of more than two-thirds of a bushel 
of wheat consumed per person. A bushel of wheat will make 66 
loaves of bread. Translated into bread this means therefore that 
every man, woman, and child in the United States is eating on t e 
the average about 44 loaves less per year than was eaten 20 years ago. 

The table also indicates that this decline in bread consumption is 
the result of economic conditions, because the decrease was greatest 
in the very depressed year 1921 and rebounded with the greater 


fxr / r vf 1 099 



SWHOLESALE1BANKRUPTCY 



17 







This would bring a much better domestic wheat market and would go 
far to check the farm-to-city exodus, which may be a means of tem¬ 
porarily restoring the balance, but in the long run constitutes a serious 
menace to national welfare. 

Few people outside the wheat states understand at all the serious¬ 
ness of the conditions or the imperative need for early relief. The 
recent report of the Secretary of Agriculture to the President on 
“The Wheat Situation” and a still more recent bulletin of the Depart¬ 
ment contain some figures that should be widely published. 

These official reports show that out of a total of 2,289,000 owner 
and tenant farmers in the wheat states, more than 108,000 lost their 
farms or other property through foreclosure or bankruptcy; over 
122,000 lost their property without legal proceedings, and nearly 
373,000 retained their property through leniency of creditors. Thus 
603,000 farmers in these 15 states are actually or virtually bankrupt. 
That is, 26 per cent of all farmers in these states have been ruined 
by the collapse of wheat prices. 

When we come to the individual states, however, the corre¬ 
sponding figures are even more startling—South Dakota, 40 per cent; 
Colorado, 42 per cent; North Dakota, 50 per cent; Wyoming, 51 per 
cent; and Montana, 62 per cent. Two farmers out of every three in 
Montana are therefore virtually bankrupt. 

Compare these figures with the profits of millers, bakers, and 
traders and understand just how far the economic system in the 
United States is out of adjustment. * 


NATURAL LAWS SUSPENDED 

We come now to the basic question—Why? We have already 
seen that it is not simply the blind result of the interplay of economic 
forces. The law of supply and demand has apparently been suspended 
in this field. The demand for bread as expressed in consumption has 
decreased but without a corresponding fall in bread prices. 

There can be little doubt, therefore, that the situation is in part, 
if not wholly, artificial and arbitrary. Unfortunately, the evidence 
available is not sufficient to disclose clearly and unmistakably the 
methods by which trade is restrained and the people robbed, but it 
does indicate quite clearly the lines for searching investigation. 

The circumstantial evidence of local, if not nation-wide, price 
control is convincing. Below is a table showing the prices of bread 
in 1923 in a number of cities. These are average prices reported to the 
Bureau of Labor Statistics by the retailers. In every city there are 
undoubtedly variations from these prices and being merely the 
unchecked reports of financially interested persons, cannot be accepted 
as conclusive evidence. It may be safely assumed, however, that the 
retailers are not reporting higher prices than they actually charge. 

18 


BREAD PRICES IN AMERICAN CITIES—OCTOBER 15, 1923 

(U. S. Bureau of Labor Statistics) 

Cents Per Pound 

10.3—Jacksonville 
10.2—Charleston 

9.9—Seattle 

9.8— Chicago, Omaha 

9.6— Butte, New York 

9.4— St. Paul 

9.3— Portland (Me.), Springfield (Ill.) 

9.2—Memphis, San Francisco, Portland (Oreg.) 

9.1— Fall River, Atlanta 

9.0—Los Angeles, Minneapolis, Washington 

8.9— St. Louis, Scranton 

8.8— Baltimore, Birmingham, Milwaukee, Providence 

8.7— Dallas, Mobile 

8.6— Bridgeport, Detroit, Richmond (Va.) 

8.5— Indianapolis, Newark, Pittsburgh, Savannah 

8.4— Boston, Buffalo, Cincinnati, Louisville, 

Manchester (N. H.), Peoria, Philadelphia 

8.1— Little Rock 

8.0—New Haven, Rochester (N. Y.) 

7.9— Cleveland, Kansas City (Mo.) 

7.8— Denver, Norfolk 

7.7— Columbus 

7.6— New Orleans 

7.1— Houston 

Can anyone offer a reasonable explanation why bread should cost 
2 cents a pound less in New Orleans and Houston, Tex., which are 
far away from the wheat and flour-milling states, than in Seattle, 
Chicago, Omaha, Butte, and St. Paul, which are in the heart of the 
grain belt? Can there be any reasonable explanation of bread costing 
2 cents a pound more in Chicago and Omaha than in Norfolk, Va., 
and Columbus, Ohio? Are there any economic laws that decree that 
Boston, Bridgeport, Manchester, New Haven and other New England 
towns should have cheaper bread than any city in the grain belt 
except Kansas City? 

A mere inspection of these prices is sufficient to demonstrate that 
they are artificial and are for the most part maintained in the face of 
the most fundamental economic laws. How they are maintained, we 
will consider later. 

The same is true when we consider the amount of increase in 
bread prices in the various cities from October, 1913, to October, 1923. 
Here we find absurd variations from an increase of 1.9 cents in Kansas 
City to 4.6 cents in Omaha. 

There is not a single city in the United States where the price of 
bread has not increased much more than the price of either wheat or 
flour. 

HOW BREAD PRICES ARE FIXED 

Conclusive evidence as to how these obviously artificial bread 
prices are fixed and maintained is not available. No nation-wide 
investigation has ever been made by any department of government 
empowered to administer oaths or examine books and papers. There 
is, however, some evidence that is indicative of the methods employed. 

In a hearing before the Senate Committee on the District of 
Columbia in 1920, testimony was presented showing the part played 


19 


by the large baking companies in maintaining bread prices after they 
have been fixed. Mr. R. O. Dawson, representing the Piggly-Wiggly 
Stores testified: 

“When we opened our stores here we had made an arrangement with 
the Corby Baking Company to handle their bread, and as I have said before, 
the cost was 7 and 13 cents. The day before our opening we had priced 
that to sell at and 14 cents, and a representative of the Corby Baking 
Company obtained that information somewhere that we were going to sell 
at that price, and he came to see me and asked if that was the fact, and I 
told him it was, and he asked us to sell it at 8 and 15 cents. I asked him 
what would be the result if we continued; that is, if we opened up for 
business at 7)4 and 14 cents. He intimated that we would not get any 
bread. Well, that caught us rather short, and there wasn’t anything for 
us to do but to take their bread and sell it at 8 and 15 cents, if we expected 
to have it for the next day’s business. They had distributed their bread 
boxes to our various stores and arrangements were all made. 

“We went along that way until May 15, and I wrote the Corby Baking 
Company a letter and advised them that we were going to sell their small 
loaf at 9 cents and their large loaf at 17 cents, which was a cent a loaf 
under the price that they had asked us to sell at after the advance, and I 
asked them to reply to this letter by the messenger who carried it to them, 
and Mr. Greene telephoned me that Mr. Corby was out of the city and would 
not return until Wednesday, which would have been about—I guess about 
the 18th and 19th—and asked me to defer any action until that time, which 
I agreed to do. I told Mr. Greene that I wanted Mr. Corby to answer this 
letter. He said that he would get in direct touch with me, which he failed 
to do. So on Saturday of May 22 I cut the price on Corby’s bread to 9 
and 17 cents, and they were delivered—they failed to deliver it Saturday 
afternoon in some instances. We were getting three deliveries a day and 
they failed to make some of the Saturday afternoon deliveries, and Monday 
morning they collected all the bread boxes.” (Page 53.) 

Mr. Corby, President of the Corby Baking Company, the largest 
bakery in Washington, when before the same committee, admitted 
this practice as follows: 

“Chairman Ball. I understood your testimony the other day to be 
that you did not fix the retail price. 

“Mr. Corby. We do not; no, sir. 

“Chairman Ball. You permit the retailers to fix their retail price of 
your bread? 

“Mr. Corby. Yes, sir. 

“Chairman Ball. No difference what they sell it at, you continue to 
supply them with bread? 

“Mr. Corby. No, sir. 

“Chairman Ball. Well, I don’t understand. You say ‘no, sir’ to both, 
that you do not fix, and yet you say ‘no, sir’ you will not continue to supply 
them. 

“Mr. Corby. Yes, sir. 

“Chairman Ball. Then if you refuse to supply them with bread if they 
cut your usual price, then you certainly do fix the price. 

“Mr. Corby. No; I can’t see it. 

“Chairman Ball. Well, now, if you supply a certain retailer with your 
bread, with the understanding that he is to charge 10 cents a loaf- 

“Mr. Corby (interposing). We have no understanding with the retailer 
at all what the price of bread will be. 

“Chairman Ball. Well, then, you will supply him with bread just the 
same if he charges only 9 cents a loaf? 

“Mr. Corby. No, sir; because a man doing that is injuring our business. 

“Chairman Ball. That is just what I am trying to bring out, whether 
you do or do not. 

Mr. Corby. No, sir; we do not. 


20 



In presenting this testimony Mr. Corby made it appear that he 
was forced to this action by the retailers—the “Trade,” he called it— 
who would boycott his company if it supplied bread to concerns that 
cut prices. This would indicate the existence of “retailers’ rings” to 
fix and maintain bread prices, supported by the big bakers, either 
voluntarily or under threat of boycott. Other evidence pointing in 
the same direction lies in the fact that in Washington and every other 
city regarding which I have information advances in bread prices are 
made simultaneously by substantially all the big bakers and retailers. 
Unfortunately, the Senate committee did not follow up its investiga¬ 
tion and conclusive evidence is therefore lacking. Here is, however, a 
fertile field for States Attorneys and Grand Juries. 

MONOPOLY IN THE MAKING 

While there is not yet a “Bread Trust” in the sense that there is a 
“Steel Trust,” the evidence is clear that this monopoly is now in the 
making. Unless it is speedily checked, the bread of the nation will 
soon be in the control of one or two gigantic corporations. 

Owing to the original highly competitive character of the business, 
the small capital required, and the impossibility of centralizing pro¬ 
duction, the process of monopolizing bread has lagged some twenty 
years behind the monopolization of steel and other commodities 
peculiarly adapted to trust control. Nevertheless the enormous 
profits that have been reaped in recent years by the bakers have stimu¬ 
lated the process of consolidation until today we have two corpora¬ 
tions—the General Baking Company and the United Bakeries Cor¬ 
poration—that cover with a net-work of wholesale bakeries twenty 
states and the District of Columbia, containing in 1920, 71,106,000 
people, or more than two-thirds of the population of the United 
States. In the larger states, they have their plants strategically 
located in two or more of the larger cities, from which they are able 
to ship their bread to the towns throughout the state and into neigh¬ 
boring states. 

The location of these plants and the trade names of absorbed 
companies under which they operate in many of the cities is shown in 
the following statement: 


CITIES IN WHICH PRINCIPAL BREAD CORPORATIONS HAVE BAKING PLANTS—WITH 
TRADE NAMES OF SUBSIDIARY OR ABSORBED COMPANIES 


Name of City 

General Baking Company 

United Bakeries Corp. 

Ashland, Ky. 

Baltimore, Md. 

Boston, Mass. 

Fox (Geo. J.) Co. 

(Including the Ward Bak¬ 
ing Co.) 

Stroehmann Baking Co. 
Ward Baking Co. 
Ward-Corby Co. 

Brooklyn, N. Y. 

Ferguson (J. G. & B. S.) Co. 
Dillman Baking Co. 

Ward Bread Co. 

Buffalo, N. Y. 

Brunner Baking Co. 

Ward & Ward 

Cambridge, Mass. 
Canton, Ohio 

Chicago, Ill. 

Collins Baking Co. 

Ontario Biscuit Co. 

Canton Baking Co. 

Ward Baking Co. 

Ward Bros., Inc. 
Ward-Corby Co. 


21 


CITIES IN WHICH PRINCIPAL BREAD CORPORATIONS HAVE BAKING PLANTS—WITH 
TRADE NAMES OF SUBSIDIARY OR ABSORBED COMPANIES 


Name of City 

General Baking Company 

United Bakeries Corp. 

Clarksburg, Miss. 


Memphis Bread Co. 

Cleveland, Ohio 

Cleveland Baking Co. 

Ohio Baking Co. 

Columbus, Ohio 


Ward Baking Co. 

Dallas, Tex. 


Campbell Baking Co. 

Dayton, Ohio 


Ward Bros., Inc. 

Des Moines, Iowa 


Campbell Baking Co. 

Detroit, Mich. 

Morton Baking & Mfg. Co. 


Gary, Ind. 


Ward Bros., Inc. 

Huntington, W. Va. 


Stroehmann Baking Co. 

Jersey City, N. J. 

Martens (C.) Co., Inc. 


Kansas City, Kans. 


Campbell Baking Co. 

Kansas City, Mo. 


Campbell Baking Co. 

Memphis, Tenn. 


Memphis Bread Co. 

Newark, N. J. 

Weber Baking Co. 

Ward Baking Co. 

New Haven, Conn. 

S. S. Thompson Baking Co. 


New Orleans, La. 

Vories Baking Co. 


New York, N. Y. 

Fleischmann’s Vienna Model Baking Co. 

Ward Bread Co. 

Shults Bread Co. 

(12 plants) 

Oklahoma City, Okla. 


Campbell Baking Co. 

Philadelphia, Pa. 

Kolb Bakery Co. 


Pittsburgh, Pa. 

Haller Bread Co. 

Ward Baking Co. 

Providence, R. I. 

Arnold-Althaus Co. 

Ward-Corby Co. 

Rochester, N. Y. 

Rochester Baking Co. 

Deininger Bros. Co. 

Ward Bros., Inc. 

St. Joseph, Mo. 

V 

Campbell Baking Co. 

St. Louis, Mo. 

McKinney Bread Co. 


Shreveport, La. 


Campbell Baking Co. 

Sioux City, Iowa 


Campbell Baking Co. 

Springfield, Mass. 

Dexter Bakeries 


Syracuse, N. Y. 

General Baking Co. 

Ward Baking Co. 

Toledo, Ohio 

United Baking Co. 

Ward Bros., Inc. 

Topeka, Kans. 


Campbell Baking Co. 

Tulsa, Okla. 


Campbell Baking Co. 

Utica, N. Y. 


Crescent Baking Co. 

Washington, D. C. 

Boston Baking Co. 


Waterbury, Conn. 

Dexter Bakeries 


Waterloo, Iowa 


Campbell Baking Co. 

Wellsville, W. Va. 

Juergens Baking Co. 


Wheeling, W. Va. 

Juergens Baking Co. 

Stroehmann Baking Co. 

Wichita, Kans. 


Campbell Baking Co. 


THE IMPENDING BREAD TRUST 

The consolidation of the Ward Baking Company with the United 
Bakeries Corporation is just now being completed. On December 11, 
1923, New York newspapers carried reports of the intended merger, 
of which the following from the World (N. Y.) is typical: 

“Negotiations for the sale of the Ward Baking Company to the United 
Bakeries Corporation are being carried on and probably will be completed 
this month. The merger would create a gigantic bread concern, with assets 
of about $75,000,000 and bakeries in about thirty cities throughout the 
country.” 

So swiftly did the negotiations move that on December 18, 1923, 
announcement was made that the deal had been consummated by the 
agreement of more than 51 per cent of WardfBaking stockholders to 
accept the offer of W. B. Ward, President of^the United Bakeries, of 
$200 a share for Ward common stock and $100 for the preferred. 

22 


Indicative of far-reaching plans for further extension toward 
monopoly is the fact that immediately after being taken over the 
Ward Baking Company was re-incorporated under a Maryland 
charter, increasing its authorized preferred stock from $15,000,000 to 
$50,000,000 and its common stock from $15,000,000 to 500,000 shares 
of Class A common (no par value) and 500,000 shares of Class B 
common (no par value). 

This huge inflation of stock would seem to indicate that the new 
Ward Corporation is to be used by the United Bakeries either as a 
basis for absorbing other companies or that its operations are to be 
increased so as to carry this immense superstructure of preferred and 
common stock. 

The phenomenal growth and expansion of this company during 
the past two years indicates the rapidity with which this movement 
toward a bread monopoly is developing. Incorporated under the laws 
of Delaware in 1922, the United Bakeries corporation acquired control 
of the Campbell Baking Company, Stroehmann Baking Company, 
Crescent Baking Company, Ward Brothers, Inc., Ward & Ward, 
Memphis Bread Company, and the Shults Bread Company of New 
York, which was, in turn, a merger of a number of the leading whole¬ 
sale bakeries in and around New York City. In December, 1922, its 
capital stock was increased from $20,000,000 to $50,000,000. Now 
by securing control of the Ward Baking Company and increasing 
Ward’s capital to more than $100,000,000, itMias reached a position 
where it can, if it chooses, dominate the entire industry. 

The flour millers now charge that by consolidating its purchasing 
power this great corporation is able to dictate the prices at which it 
will buy flour, particularly to'the smaller millers. Thus it is said to 
be able to secure flour much cheaper than its smaller competitors and 
thus secure a great advantage in competition. 

How far this pressure has been exerted cannot be determined from 
the available evidence, but it is clear that the situation demands imme¬ 
diate and thorough investigation. 

It is apparent, moreover, that this tendency to monopoly, this 
constant increase in the size of the bread corporations, is not economical 
or in the interests of the consumer. This is clearly brought out in the 
testimony of Mr. William H. S. Stevens, Assistant Chief Economist 
of the Federal Trade Commission, before the Senate Committee on 
Apiculture and Forestry on February 17, 1922, as follows: 

“Possibly the committee would be interested in knowing also the varia¬ 
tion in costs, resulting from the size of bakeries. It is rather interesting that 
you do not find the decrease in the bakers’ cost as the size increases that 
appears in many lines. In bakeries of over 20,000 pounds per day, the 
commission found the cost per pound to be 7.3 cents; in bakeries running 
from 5,000 to 20,000, 7.2 cents, and in bakeries under 5,000, 6.9 cents. 
(This was on the basis of $11 flour.) 

“The Chairman. It would rather indicate that the smaller the bakery 
the lower would be his production cost? 

“Mr. Stevens. That is apparently indicated. The smaller the bakery 
the more economical, so it would seem, is the production. The reason, 
perhaps, is that the smaller bakeries retail and have less selling and delivery 
expense, whereas the large bakeries are usually wholesalers and selling and 
delivery expense is higher because of the fact that it is necessary to employ 
salesmen to sell the retailers. When you get to the large classes of whole¬ 
sale bakeries, they often sell entirely to the retailers, whereas the smaller 
bakery often sells only to the consumer.” 

23 


The surest method of checking this tendency to monopoly is by 
reducing bread prices to normal levels. As long as bread prices remain 
such as to permit earnings of 117 per cent and stock dividends of 100 
and 200 per cent, the temptation to monoply will be so great that it 
cannot be checked by anti-monopoly laws or threats of prosecution. 

WHAT OUGHT TO BE DONE 

The first step toward normal bread prices is speedy and official 
establishment of the facts along the lines set forth in this report. If 
the people know how they are being robbed they will not long tolerate 
the present conditions, but will demand what they are entitled to 
have on the basis of present wheat prices—a five-cent loaf. 

It is for this reason that the following recommendations for im¬ 
mediate action are made: 

1. A Senate resolution directing the Secretary of the Treasury to 
report the profits of all baking and milling corporations, as disclosed 
by their tax returns from 1918 to date. 

2. A thorough and searching investigation by the appropriate 
Senate committee of the tribute levied by wheat speculators, grain 
elevators, railroads, millers, jobbers, bakers, and retailers from the 
time the wheat leaves the farm until it reaches the dinner table in the 
form of bread. The committee should be empowered to employ 
counsel and compel the production of books and papers so that all 
the unethical and illegal methods by which the price of bread is 
enhanced may be disclosed. 

When these facts have been completely exposed, it will be time to 
talk of remedies, if in the meantime the American people have not taken 
matters into their own hands and compelled the doing of justice with 
reference to this most essential commodity. 

In conclusion it may be suggested that the restoration of just and 
normal bread prices offers an opportunity to save the American 
people at least $500,000,000 a year—a sum far exceeding the amount 
involved in Secretary Mellon’s proposed tax reductions. 


NOTICE 

Additional copies of this pamphet will be furnished, postpaid, at the follow¬ 
ing rates: Per copy, 10 cents; per 100 copies, $7.50; per 1,000 copies, $60.00. 


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